The children of this country owe a debt of gratitude to Malcolm Wicks, who died last year. If you have ever benefited from child benefit, you have him to thank.
While Wicks was dying he wrote a memoir, which has now been published by his family. In one of the chapters, he reveals that he was “Deep Throat”. This was the name given by Frank Field, then director of the Child Poverty Action Group, to the person who leaked the cabinet minutes on child benefit in 1976.
These revealed that the then prime minister, James Callaghan and his chancellor, Dennis Healey, had tried to force the abandonment of child benefit. CPAG had been campaigning for child benefit since 1967; it had been a manifesto commitment in 1974, and the Child Benefit Act had already been passed in 1975. A series of articles published in New Society based on the leaked material resulted in a huge political furore, which rescued the scheme. As a result, child benefit began to be payable in 1977.
Without the leak, it is very unlikely child benefit would ever have existed. Mrs Thatcher was elected in 1979 with a commitment to rolling back the welfare state, and although she did not abolish child benefit, she froze it for four years from 1987. It continued to wither on the vine throughout the Tory years before being rescued by the Blair government in 2000.
Malcolm Wicks can therefore be given the credit for 37 years of financial aid to mothers and children – an enormous contribution to the relief of child poverty and to child well-being. I have estimated (see below) that since it started, the policy he saved has been worth between £73 billion and £288 billion to families with children.
Leaking the documents was a hugely courageous act. The government was outraged that their shenanigans had been exposed to all and sundry; the cabinet secretary was ordered to find the culprit and, when he failed, the head of Special Branch who “always got his man” was set to search him out. But Wicks, then a policy analyst in the Urban Deprivation Unit in the Home office, was never identified. He went on to establish the Family Policy Studies Centre, become Labour MP for Croydon Central and served as a senior minister in the Blair and Brown governments. He wrote:
Was I right to leak the cabinet papers? I still think I was. In the normal course of events civil servants, ministers and special advisers should not leak confidential material. It goes without saying that matters relating to national security have to be heavily safeguarded. But regarding the introduction of child benefit there was, I felt, a moral issue. It simply could not be right that ministers, at the most senior level, should manipulate internal discussions in such a way that the cabinet itself was misled. I thought – and still think – that in those circumstances it was justifiable to leak or, putting it more positively, to let the wider public know what was going on.
Estimating the benefit
Child benefit was enacted in 1975 and phased in between April 1977 and April 1979. In 1977, it was paid at £1.50 per week per child, replacing family allowances paid at the rate of £1.50 for the second and subsequent child and child tax allowances paid in respect of each child of a taxpayer. The value of child tax allowance varied with the child’s age and parental income; it was worth more for higher rate taxpayers and nothing for non-taxpayers. In April 1977 child tax allowance was worth £1.94 per week for a standard rate taxpayer with a child under 11.
Child benefit was first paid in April 1977 at the rate of £1.50 a week for the first and subsequent child. In real terms, that would be £7.96 a week in April 2012. For a two child family, this was 4.2% of average earnings. It was fully phased in (and the child tax allowance fully phased out) by April 1979 at the rate of £4.00 per week per child, or £17.96 in April 2012 prices, and was then worth 9% of average earnings for a two child family.
Today, child benefit is paid at the rate of £20.30 a week for the first child and £13.40 per week for the second and subsequent child. For a two child family in April 2012, that was worth 5.5% of average earnings.
To estimate the net benefit of child benefit over the subsequent years, one really needs to be able to predict what would have happened to family allowances and child tax allowances if child benefit had not been introduced. That is not possible.
Before child benefit there had been no family allowance for the first child, and the child tax allowance that had been worth £1.94 for a standard rate tax payer with a child under 11 had been phased out. So the net benefit was £2.06 per week per family, or £107 per family per year (£543 today). Over a childhood of 17 years that is £9231 (though actually child benefit is paid up to 19 for those in education). In 2012 there were 7.92 million families with children – so in current terms, child benefit for the first child benefits all families to the tune of roughly £73 billion.
A less modest claim is that currently child benefit transfers £11.4 billion each year in favour of families with children for 13.8 million children, which is an average of £826 per child per year. Over a 17 year receipt it is £14,042 per child in current terms. Two 17 year long generations of children have lived since 1979. Therefore, £14,042 x 2 x 13.8 million children, £388 billion has been transferred in respect of children since child benefit started.
Inexact though they are, these sums show the huge extent to which this nearly abolished policy has helped British families – and by the same token, the magnitude of Malcolm Wicks’s legacy.